You will leave the facets that makes up the horse’s head frosted so that it will show up through the crown when set. I’ve cut many of these frosted designs and everyone that I have shown them to or gifted too, are always impressed to see the silhouette of the frosted image show through.
Personally I would use a 1500 or 1200 grit to cut those facets so they show up well. Some designers say to use a 600 grit, however I find that too course, where as a 3000 is too fine and the image won’t show well. Another thing I might suggest is to cut it in either a clear or light colored material. More intense colors will cause difficulty in seeing the image.
I normally set them in a pendant setting.